Mosendo's market extends to anywhere that people experience money pains. Where money gets caught up on borders, is in accessible by average people, or banks make using money a nightmare.
These money pains are felt most acutely across emerging economies, with their intersection of poor financial infrastructure, low access, and undemocratic regulation. This, combined with high mobile phone adoption, makes SE Asia & LatAm ideal starting points for Mosendo.
This first phase of Mosendo's expansion will focus on two categories: cross-border payments and the unbanked. Each of these categories have populations with criteria that lend themselves to Mosendo's adoption: high tech literacy, low financial access, and the need for financial services.
On average the cost of transferring money across international borders is 7%, according to studies by the International Monetary Fund and the World Bank. The people who rely the most on cross-border payments are migrant workers who remit money home, and they are disproportionately limited access to formal remittance services, mainly because they lack government ID.
Primarily focusing on SE Asia, migrant workers constitute of 33.4 million, with an average salary of $3,720. Migrants workers in SE Asia contribute to more than 20% of migrant workers globally, indicating a market opportunity for remittance services. To take this into perspective, in 2018, an estimated $689 billion was sent worldwide, of which, approximately $80 billion was sent to SE Asia, and $529 billion was sent to developing countries. Further to this, there is a large scope for digital nomads who use methods of cross-border payments to have access to money from home banks. With a ballpark figure of 55 nomad hub cities in SE Asia, digital nomads’ expenditure averages at an estimated $3 billion per year.
The need for cheap and frictionless financial solutions are on the rise for both migrant workers and digital nomads, whereby the figures indicate a potentially large market to be tapped into.
An estimated $25 billion is lost through remittance fees by migrants every year, accounting for approximately 3.6% of total remittances sent worldwide. Scoping this down further to the SE Asia region, remittance fees accounts for $3 billion of the total $80 billion sent (relatively 12%). However, these figures only account for the formal banking methods and excludes the informal solutions that are offered to those who are ID-less and want to send money back home - a large unaccounted for population!
Sol Garcia, the owner of Wanderlancers, explained to Mosendo that the popularity of freelancing in Argentina has exploded in the last 5 years. Technology makes it possible and the poor economic situation makes it especially valuable to work in this way.
The market size of this group is difficult to estimate. Remote work websites like Workana and Upwork each have thousands of job postings from freelance workers in emerging economies.
"Australian-U.S. startup 99designs, for example, has paid out $40 million to some 180,000 graphic designers, with its largest user base outside the United States being in Indonesia. Elance has 266,000 freelancers in India who have earned nearly $150 million. Odesk has 2.4 million registered freelancers and more than 480,000 clients - companies including Cisco and HP." - Reuters
Digital Nomads are similar to freelancers in that they are working for clients all around the world, but in their case, they have also traveled to live in one or many other countries. The majority of them use their banks from home and transfer money regularly to where they stay.
The number of nomads worldwide is anyone's guess. Almost by design, these people are difficult to count because they do not stay put for any kind of census. Most of them continue to use their childhood home or mail forwarding services as their address of physical registration.
We have estimated the total market in SE Asia for digital nomads to be between $2.2-$3.9 billion USD per year in dollars transferred. This is based on 55 nomad hub cities listed on nomadlist.com, with an estimated total nomad population of 357,000-644,000 people and calculated using reported cost-of-living numbers.
Approximately 1 billion people do not have proof of identity, prohibiting them from accessing financial services. Focusing on the SE Asia market, 65 million are ID-less, contributing to approximately 6.5% on the global scale. On the other hand, the growing nature of SE Asia is being propelled by the middle class sector whereby there will be an additional 50 million new consumers joining this market segment, increasing the total to an estimated 350 million consumers by 2020. This will eventually contribute to the regions’ $300 billion middle-class disposable income, increasing the need for more viable and cheaper financial solutions for the growing market segment.